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Research & Development Tax Credit Claim Preparation
General Program Information
Research & Development (R&D) tax relief is a government incentive to encourage companies of all sizes and in all sectors, to invest in R&D activities by claiming relief on qualifying costs and is administered by HM Revenue & Customs (HMRC).
R&D tax credits can either reduce a company's tax bill or, for some small or medium sized companies, provide a cash sum. The R&D tax credit works by allowing companies to deduct up to 175% of qualifying expenditure on R&D activities when calculating their profit for tax purposes. Companies which are Small & Medium Enterprise (SME's) can, in certain circumstances, surrender this tax relief to claim payable tax credits in cash from the HMRC.
There is a time limit of two years from the end of the accounting period to submit an R&D claim with the return. In addition, SMEs may choose to "trade in" their R&D losses and receive 24.5p (24p for expenditure prior to 1 August 2008) for each £1 spent on qualifying R&D.
Who can claim R&D tax credits?
Only companies can claim and your company can only claim R&D Relief if it's liable for Corporation Tax.
There are two schemes depending on whether the R&D is carried out by:
How is an SME and a large company defined?
The definition of an SME is that used by the European Commission although the thresholds are higher for expenditure on or after 1 August 2008. Briefly, an SME is a company with fewer than 500 employees, and either annual turnover not exceeding €100M or a balance sheet totalling €86M, and which is not part of a larger enterprise that would fail these tests.
A large company is one which does not meet this definition.
What are the differences between the SME scheme and large company scheme?
Very broadly the key differences are as follows:
We make claims for companies across a range of sectors including:
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Manufacturing - machine modifications, process improvement, unique products.
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IT Technology - software development, system integration, database development
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Food and Beverage - ingredient modification, improved recipes, low carb/fat
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Electronics - hardware developments, modification and customisation
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Metal Fabrication - new materials, heat treatments, unique solutions
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Plastics Industry - resin types, quality and production time, polymers, unique solutions
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Chemical - chemical design and synthesis, formulation, processes, experimentation
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Environmental Technologies - technological experimentation, product development
Our services include the following:
- Initial consult meeting to access eligibility (no cost).
- Meet your key technical team members.
- Uncover and review all eligible projects.
- Assemble all necessary technical information to prepare technical report.
- Gather all eligible financial expenditures to optimise your claim.
- Prepare all required forms.
- Monitor your claim once filed.
- Provide support to your technical and financial team during government reviews.
- Consult, advise and make recommendations associated with future claims.
All services are provided risk free to you; all of our fees are based on contingency, a % of tax credits granted.
Our personalised and highly professional team will help you in understanding the program and its subtleties, taking care of your claim, allowing you to focus on your business.
Some Common Misconceptions that may be preventing you from claiming...
High Tech sector only? NO - R&D is not performed in laboratories only. It can happen in an office behind a computer or on the shop floor. When modifying a product to make it more durable or precise or when altering an internal process to make it more profitable or efficient. The work may actually be experimental development and might qualify for an R&D tax credit.
Research ownership - Some taxpayers assume that since someone paid them to develop a custom product or process, their customer owns the technology and they cannot claim R&D tax credits on the work that they performed; this has never been true for large companies and is no longer the case for SME's either. What matters is that the SME has a 'substantial right to exploit' the intellectual property created.
Eligibility - Some companies believe they are not eligible for a refund because they are in a loss position and don't pay income taxes. The programme provides cash refunds to some companies that are in a loss position.
Difficult and Time Consuming - the main culprit might still be the complex nature of the claim process. Filing for an R&D tax credit requires a great deal of time, resources, expertise and commitment. That's why Stonecracker exists, to do the work so you don't have to.
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